Archive

Home loan advice no 1.
Buy a home only if on the long run it’s value will increase. If it’s old, in bad shape, you have bad neighbors, try to not take the loan

Home loan advice no 2
Be very carefull of the banks conditions. If the bank asks you for several commisions, if the bank has hidden conditions, if you want to repay in advance the credit and they charge you more for this, etc.

Home loan advice no 3
Beware of your further ability to make money. If you will not make a lot of money in the future, getting a huge loan now it will not be a sound decision

Home loan advice no 4
Always negociate. Even banks have some fixed products, there is room for negociations. After all, they are humans. And humans are changeble. Anyway, you want loose anything.

Home loan advice no 5
Don’t trust very much loan brokers. Because they are interested in selling you the best product for them, not for you. Do you really think that they will present you the product that will bring them the lowest commision? Common. Especially for mortgages, where the values are very high.

Credit cards are one of the most devious invention of human kind. It allows you to spend, mortgaging with your future life and future incomes. What is weird is that everybody consider that THEY DESERVE to spend on debt. So credit cards become a very good industry to make people slaves to consumption.

USA became the most in debt country in the world. And collectors will come some day. Usually in a form of the crisis. Now we have a big crisis on our hands. Hopefully it will pass. But huge amounts of money had been lost…

Anyway, my advice to you is to NOT USE credit cards again. I know, you got used to them. They are handy. They are cool. But is wrong. You should consume on what you have.

Buying on credit was considered a excelent invention. It permits you to buy something now, instead of 20 years from now. In both cases you were paying the money. The only difference is that if you buy on credit, you get the asset now, not when you are old and dying.

The things is that buying on credit involves many risks.

The exacerbation of the credit (especially via credit cards and loans), determined the increase of prices. If the credit was not here, the prices would be a tenth of present value. Much more affordable, in the first place…. isn’t it? Not to mention the devaluation of whatever you can buy with a credit card.

Credit cards are nocive especially because they allows you to buy consumption things, not assepts that you can consider investments, correct?

So, why should you use credit cards? Just as a drug addict needs his dose? Can’t you restrain yourself from spending guaranteeing with your future life? Credit cards are good only if you invest something in yourself. If allows to buy a future stream of income.

Well, that didn’t take long. In November, BusinessWeek had a big cover story on the way in which dodgy subprime lenders were moving into the formerly safe-and-boring world of FHA loans. And now the shoe is dropping:

In the past year alone, the number of borrowers who failed to make more than a single payment before defaulting on FHA-backed mortgages has nearly tripled, far outpacing the agency’s overall growth in new loans, according to a Washington Post analysis of federal data.
Many industry experts attribute the jump in these instant defaults to factors that include the weak economy, lax scrutiny of prospective borrowers and most notably, foul play among unscrupulous lenders looking to make a quick buck.
If a loan “is going into default immediately, it clearly suggests impropriety and fraudulent activity,” said Kenneth Donohue, the inspector general of the Department of Housing and Urban Development, which includes the FHA.

Annoyingly the WaPo story can’t find space in almost 2,300 words to ever tell us the rates at which FHA loans are souring: we’re told that the immediate-default rate has “nearly tripled”, for instance, but we’re not told the absolute default rates. The closest we get is this:

More than 9,200 of the loans insured by the FHA in the past two years have gone into default after no or only one payment, according to the Post analysis.

I haven’t been able to work out where the FHA reports the total number of loans that it originates; the best thing I’ve found so far is this chart, showing FHA originations rising from about 60,000 a month in January 2008 to over 140,000 in August. So very roughly I’d guess that over the past two years the FHA has insured about 2 million loans. If that’s the case, then the immediate-default rate is about 0.5%. But some hard numbers would be very welcome here.

families restructure or refinance their mortgages to avoid foreclosure. The first component of the plan is to offer REFINANCING to homeowners to make their mortgages more affordable. Williams said interest rates have come down substantially since the